Why Are Houses So Expensive Here?

How can we get property prices down? Future generations will be screwed.

Comments

  • +139 votes

    When you find the answer post it here.

    • +5 votes

      I would have thought just asking nicely would have done.

      • +1 vote

        Anyone even tried some thoughts and prayers?

    • +30 votes

      Nearly all politicians have a second property and they are not keen on doing away with negative gearing which not be in their interest. Negative gearing makes real estate a very attractive investment option.

      Now, if Australia copied New Zealand's newly introduced property tax measures it would improve things but as I mentioned above…
      https://realty.economictimes.indiatimes.com/news/industry/ne...

      • +34 votes

        Negative gearing has very little to do with it. It does put some pressure on but it is nothing compared to the supply problem, you have increasingly slow land releases and increasingly painful local regulations to deal with coupled with record low interest rates. With a massive undersupply and rates as they are it will not matter what they do with negative gearing the trajectory is up. what we need is a couple of percentage increase in interest rates, that will be a reality shock that will see many flee the market.

        • +17 votes

          Negative gearing has very little to do with it

          Disagree, many people have negatively geared properties to offset tax including every single Politician given their incomes are minimum $250K pa

          you have increasingly slow land releases

          OP is not talking about buying property new Kangaroo Valley in NSW, they're referring to property prices in area in NSW like Mascot, Botany, Pyrmont, going for $800,000 beyond the reserve

          what we need is a couple of percentage increase in interest rates

          Doesn't do much for people with negative gearing which offset the interest rate payments. We are talking about houses that are near-dump material selling in South West for over a million. When people can afford a mill for a dump, raising the monthly repayments by $200-300 will not budge people.

          The other reasons for increasing property prices which you failed to mentioned are:

          • Foreign Investors, mainly Asia markets
          • High LVRs, Banks throwing loans for people with $10K+ deposits and idiots relying on LMIs
          • Poor compliance and Building Standards across state and local councils - Developers snapping up properties and building shoddy dwellings which would otherwise fail compliance and selling them off for a phat profit.
          • Corrupt and filthy Councils and Councillors providing DA and other Zoning approvals to people they know
          • +1 vote

            @frostman:

            Disagree, many people have negatively geared properties to offset tax including every single Politician given their incomes are minimum $250K pa

            yeah they do, but getting rid of negative gearing would make very little difference, except for the rental prices which would need to go up. Other factors like interest rates are a more significant factor.

            OP is not talking about buying property new Kangaroo Valley in NSW, they're referring to property prices in area in NSW like Mascot, Botany, Pyrmont, going for $800,000 beyond the reserve

            property shortages affect all. If someone can't get new then they have to buy older pushing both up.

            Doesn't do much for people with negative gearing which offset the interest rate payments. We are talking about houses that are near-dump material selling in South West for over a million. When people can afford a mill for a dump, raising the monthly repayments by $200-300 will not budge people.

            It does a LOT to people with negative gearing, negative gearing reduces the pain by about half if you earn enough, many negative gearers though are not $250k+ pollies, they are average people and it will hit hard. If they are negative gearing they are losing money on the property and hoping for long term gains, it significantly increases the cost of holding that property.

            All your other items again have some effect but a relatively minor compared to the shortfall of properties and interest rates.

            • +1 vote

              @gromit:

              All your other items again have some effect but a relatively minor compared to the shortfall of properties and interest rates.

              The property market has been on fire for the last ~10 years.

              I have friends that bought an apartment In Bankstown for $520,000 back in 2013.

              Variable Interest Rates have NOT been between 1.8-2.7% for the last 10 years, why was the market still hot?

              • +2 votes

                @frostman: because they have been decreasing for this whole time. According to RBA, interest rates are the single largest factor in house price rises. Basically, Australian's purchase decision function is "can I afford my next loan payment" If the answer is yes, they buy.

              • +1 vote

                @frostman: property market has been on fire for last 10 years, shock horror and what a coincidence interest rates have been in constant decline for 10 years too.

                •  

                  @gromit: You're out of depth in this chat - suggest you stop digging yourself a hole.

                  When you say the rates on constant decline in 10 years it doesn't mean they're dipping 1% per year to have the effect you're perpetrating.

                  The charts say:

                  14-Jan-2014: Basic VA Interest rate was: 4.94%
                  01-May-2016: Basic VA Interest rate was: 4.05%

                  What does that say? that over (almost) 2.5 years the VA rate dipped by less than 1%
                  This is NOT reflective of your narrative of OMG! INTEREST RATES ARE DOWN GUYS, LETS BUY! theory.

                  Reality, people were fixing their loans at 4.5% throughout the massive hot market of 2014+
                  4.5% is nowhere near the cheap home loan rate people die for, so why was the market still hot?

                  Read my message here

                  •  

                    @frostman: You're out of depth in this chat - suggest you stop digging yourself a hole.

                    Declining rates are like slowly putting wood on a fire, it has a snowballing effect. 4.94% is an already historically extremely low rate hence why people were locking in those 4.5% rates as they were amazing and the trend was down with sentiment expecting drops. even the RBA acknowledge interest rates are the primary driver of the current house price inflation.

                    to give you an idea of how good 4.5% was at the time, that is a rate we had not come within 1% of for nearly 50 years.

                  •  

                    @frostman: 4.94% to 4.05% is actually a drop of 18%.

                    •  

                      @Quantumcat: I meant 1 basis point, but ok - ignore the big picture and focus on the mathematics.
                      You must be fun at parties.

          • +2 votes

            @frostman:

            OP is not talking about buying property new Kangaroo Valley in NSW, they're referring to property prices in area in NSW like Mascot, Botany, Pyrmont, going for $800,000 beyond the reserve

            But why do you need to live in Mascot, Botany and Pyrmont?

            I think part of the problem is that this is just good old postcode elitism where people want to buy into these areas as a means of improving their social score.

            FWIW, I have a lot of sympathy for people who cannot afford housing. I have almost next to no sympathy for people who can't afford to buy in Botany. Same as how I would have a lot of sympathy for someone who can't afford clothes, but next to none for someone who is complaining about not being able to afford LV / Ralph Lauren or whatever.

            • +4 votes

              @p1 ama: Agree. First home buyers should be looking at first home buyer suburbs in the outer suburbs, assuming they have median/average incomes. If they must live in established blue chip suburbs, then they need to understand that they may only be able to afford an apartment/flat/unit.

              e.g. You can find a town house in St Marys for circa $600k, but I figure many first home buyers will turn their noses up to such a suburb.

              •  

                @pogichinoy:

                e.g. You can find a town house in St Marys for circa $600k

                And pay extra $3,000 / year on Car and Home + Content Insurance?
                Increase your chance of your car broken into?
                Sell your private car for 20% lower than the market?
                Have issue selling anything on Gumtree?

                ok

                • +4 votes

                  @frostman: It comes with its pros and cons. Would you rather slap an extra $500k-$1M on top of that to move further inward by say 20km?

                  • -3 votes

                    @pogichinoy: Not at all - and i'm not of the type to live in up market areas for the name.

                    Problem is, I myself looking for a 1st property under 1.5M and cannot find anything that doesnt involve areas like Macquarie fields, and minto,

            • +2 votes

              @p1 ama: TBH Botany and Mascot are not really affluent areas, and I only used these as a random throwaway suburb which is popular for purchase.
              Other suburbs would be Oatlands, Baulkham Hills, Bella Vista, Waterfall, etc - not ONE house in these areas is worth less than $1.5M

              So again, if you wanna go live in a dump and tell me it's affordable - go for it.

              •  

                @frostman: What property type are you after?

                Baulkham Hills, and Bella Vista aren't exactly FHB material. They're established family suburbs. Dunno much about Oatlands or Waterfall.

                Have you considered Hornsby or Berowra?

              •  

                @frostman: Not sure what you're after specifically but I was curious about waterfall and still see 4bdr completely fine houses sold there for around the $1M mark. That being said, waterfall is too far from the city for me personally once we have to start commuting in again.

          • -1 vote

            @frostman: I havent read a partially informed infor in ozbargain in a while. Sadly, there is next to nothing little people can do about it. Especially, when there are million Aussie without job and the whole economy is uncertain. Heck most of us got lockdown like prisoners, even pedo has more rights …

        •  

          I am not sure the problem is a undersupply when people own multiple properties, that just means thats one less available home for someone to call their home and own it themselves…Most of my friends have between 3-50 properties per friend. I agree they are probably not the average person but thats the catch, too many of the wealthier families own multiple properties, so then of course there is far less properties available for people trying to buy their first home. Then there are all the foreign investment / ghost town type setups as well as in a lot of cases with international students, comes their families purchasing property for them here while they are studying but once they leave, I am not sure what the norm is in regards to that?

          •  

            @lonewolf:

            Most of my friends have between 3-50 properties per friend

            And there are loop holes to not pay CGT when selling the investment property, it's a vicious cycle.

            I blame the State and Federal Government, they arn't doing enough to kerb the systemic problem.

          •  

            @lonewolf: Average number of homes for property investors is only around 1.3, so no your friends are not remotely good examples of the average investment home owner. 71% own just 1 property and 90% own 2 or less. The undersupply is real as is easily visible by the problem being both on the rental side and the purchase side. A lot of the foreign investment stuff is also highly overrated, people see someone of asian background at an auction and automatically assume it is a foreigner buying property, one of my mates in is asian heritage, born and lived in Australia his whole life yet multiple times at Auctions he got to hear snide racist remarks about foreign investors pushing prices up as they just automatically assumed he was not Australian.

            •  

              @gromit: I presume that is for Australia? I would like to know the stats for Sydney and Melbourne. The other issue is this doesnt address the fact that its not how many people own properties, but how many properties are owned by people, what i mean is just like income and wealth etc. It can look like only a small % own multiple properties, but some of those people can own 10-50 properties. And every extra property owned means one less property for people to call their home.

              The other thing is i know some foreign investment and home buying comes under university students (their families) buying home while they are studying, I am not sure if thats kept track of or not.

        •  

          Negative gearing has very little to do with it

          Yes. People who buy for negative gearing problems are going to have problems down the track when it is positively geared and you can sell but have a CGT problem. Once you get off the ladder it is hard to get back in after you pay off your CGT and having to find money for stamp duty.

          I'd suggest the saying about "money and fools" are the reason. Most people won't admit to being fools. You can see the fools who run the bank of mum & dad. Takes a generation to stretch prices beyond affordability of young people, now you take your profits and have to put it back in.

        •  

          I agree, negative gearing has little to do with it.

          When you look into the prices, the one that pays highest prices is houses buy owner occupied buyers. Investors buys high depreciation brand new or new-ish apartments, that can maximise tax gain.

          Ultimately, a home is the final goal of every new adult. They would save money from food, entertainment, even by eating mi goreng every day so that they can get out of their mother's nest.

          Unfortunately their funding will consist of loan, up to 95% of it. This then largely depends on the interest rate. This is where investors has advantage. When interest rate drops, Investor's existing loans repayments drops as well, thus increasing their ability to borrow more.

      • +1 vote

        Lol.

        Have you seen New Zealand house prices?

    • +5 votes

      Abolish Zoning.

      Check the house prices in Houston that has no Zoning. Houston is a booming city that has grown massively in the past 40 years. It still has affordable housing.

      Ed Glaeser wrote this paper on the cost of Zoning : https://www.nber.org/system/files/working_papers/w8835/w8835...

      Peter Tulip replicated the work to calculate it for Australian cities :

      https://www.rba.gov.au/publications/rdp/2018/pdf/rdp2018-03....

      There is a list of books about Zoning at Market Urbanism

      https://marketurbanism.com/2019/04/16/what-should-i-read-to-...

      • +1 vote

        It is a common misconception that Houston does not have zoning. It simply has a different way of zoning (ie: ordinance restrictions). While you could probably replicate some of Houston's ordinance within Australian legislation, unless you unified all state planning schemes to have identical regulatory legislation and oversight (they currently don't) the widespread introduction of ordinances and removal of zoning is simply likely to create further confusion and potentially poor outcomes as governance, developers and homeowners navigate a new set of rules while dealing with existing use rights. None of this would necessarily lead to falling house prices, as Victoria's housing stock has increased over the past 18 months during a period of population stagnation while still recording record growth in housing prices not seen since 1989 (shortly before the recession).

        As an aside, noted neoliberal urban economist Ed Glaeser has many academic critics, some of which deserve consideration. Peck, 2016 immediately comes to mind. This is not to say that I disagree that zoning should be loosened (something that is slowly being done in Victoria), but it is unlikely to deflate house prices in Australia in the near term.

        • +2 votes

          Houston doesn't have zoning locked in by laws that are extremely difficult to overturn. Houston's rules are different and regularly expire. It works. Houston's cost of housing is about 20% lower than Dallas Fort Worth.

          Here is an example of loads of development that can happen in Houston that wouldn't be allowed in most places.

          https://nextcity.org/daily/entry/six-buildings-neighborhoods...

          People building high rise in what was largely suburban areas. By allowing this over a considerable time prices have been kept reasonable.

          Houston has an average house price of US 285K

          https://www.redfin.com/city/8903/TX/Houston/housing-market

          Glaeser's work has been replicated around the world by many people in many different cities.

          Supply and demand works. It's a real thing. If you constrain supply by stopping people building where there are jobs prices will rise.

          The Grattan Institute, which is generally pretty pro-government is happy to say that ~40% of the cost of housing in Sydney and Melbourne is due to zoning.

          https://grattan.edu.au/news/rba-research-shows-that-zoning-r...

          For anyone interested in this look up YIMBY ( and check out the reddits for YIMBY )

          Markets have made cheap computers with incredible power, cheap clothing, cheap flights, cheap food, fairly cheap cars. It's what everyone on Ozbargain is constantly looking for and finding.

          Markets haven't been allowed to build cheap houses because Zoning has restricted supply where people can get high paying jobs. Except in some places… like Houston.

          • +1 vote

            @sien:

            block-quote Houston doesn't have zoning locked in by laws that are extremely difficult to overturn. Houston's rules are different and regularly expire. It works. Houston's cost of housing is about 20% lower than Dallas Fort Worth.

            Yep. Houston has a different way zoning. I am not arguing it isn't effective for Houston, nor that zoning is the 'right' way to do things, rather I am stating that it will not provide any short to medium-term solution as:

            block-quote unless you unified all state planning schemes to have identical regulatory legislation and oversight (they currently don't) the widespread introduction of ordinances and removal of zoning is simply likely to create further confusion and potentially poor outcomes as governance, developers and homeowners navigate a new set of rules while dealing with existing use rights.

            block-quote Glaeser's work has been replicated around the world by many people in many different cities.

            Which work? The replication of Houston's ordinance on a national level? If so please post the links, I would be interested in seeing them.

            block-quote Supply and demand works. It's a real thing. If you constrain supply by stopping people building where there are jobs prices will rise. The Grattan Institute, which is generally pretty pro-government is happy to say that ~40% of the cost of housing in Sydney and Melbourne is due to zoning.

            I am not arguing that supply and demand doesn't work. What I am stating is that this doesn't adequately capture the woes of the Australian housing market and that a zoning change won't fix it in the short to medium term. The Grattan Institute article is from 2018, prior to COVID and the lockdown of Australia. Certainly a case can be made for a housing market like Hobart that it is a simple supply and demand issue, in line with macro-economic projections without further qualitative analysis. However, that does not hold true with what is happening in 2021 in Melbourne, which is beginning to see the first axiom of economics at work through out-migration. For example:

            The population of Greater Melbourne has declined by 16,900 people over the Dec 2020 and Mar 2021 quarters (ABS, 2021) with further population losses likely to be registered in the next quarter (both metropolitan and regional). Simultaneously, [NHFIC] (https://www.nhfic.gov.au/media/1581/nhfic-state-of-the-natio...) predicts an oversupply of 42,000 dwellings in the Melbourne metropolitan market by the end of this year. Despite this, Melbourne has seen a rapid growth in house prices due in part to a lack of stock being available on the market, despite supply exceeding demand in raw terms.

            The discrepancy between the number of houses available on the market in desirable areas, the increase of supply in housing stock and the number of people still unable to afford to buy a home can easily be explained by the empirical data that most of us already know. A proportion of Australians own multiple properties and are utilizing them to generate passive income, negatively gear them to offset their tax burden or flip them at a profit as the market continues to surge despite supply constraints easing. The idea that removing zoning and replacing it with a Houston style ordinance would not necessarily change the buying habits of real estate investors, nor would it quickly increase supply due to the length of construction times, limitations on available workforce or the massive amount of legal and legislative problems you would have with instituting a new system nationwide. What you are suggesting would take decades, at which point the market will have already corrected itself. I am not suggesting that changing zoning is a bad thing, I am simply stating it will not fix the current affordability issues in the Australian housing market quickly enough.

            The removal of negative gearing, an increase in interest rates or a tax on vacant properties would all be ways of quickly addressing housing prices, but because Australia's economy is currently so thoroughly invested in housing and construction not even the Reserve Bank is willing to pull the trigger.

          • +2 votes

            @sien: unh - last time I looked the United States had maybe the largest percentage of arable land with reliable water supply, suitable for farming and housing – of any country on earth.

            Australia is one of the driest continents on earth, with one of the most urbanized populations, mostly along the narrow coastal strip East of the Great Dividing Range - once you go more than 150 miles inland water supply drops off rapidly apart from sub-soil artesian (hello fracking bastards) and you see why Australia's average population density is about 3 people/sq.km compared to the US at nearly 36 i.e. about 12 times the population density over the entire landmass - https://www.spacer.com.au/blog/population-density-how-does-a...

            Australia's land size is similar to the contiguous US (excl. the sparsely populated too-cold and remote Alaska)

            if we compare areas of low population density on the following two maps (the darkest green areas) -

            US - https://www.reddit.com/r/MapPorn/comments/efktbj/population_... and

            Australia - https://www.reddit.com/r/MapPorn/comments/ep9xwz/population_...

            you might get a sense of why Australians compete for housing in the relatively crowded cities

            supply and demand - highest paid jobs tend to be in the highest population cities (by synergy) - so those places tend to have the highest prices

            Houston TX may be a cheaper place to buy - I think it took me about an hour to drive from central Houston to NASA - on freeways - this says only 29 mins for 26 miles(42km) now at 1am TX time - https://goo.gl/maps/VZjbR2oN8YkJS7jG8 - but daytime traffic - I read that a guy leaving Dallas TX was sick of 2 hours EACH WAY commutes to work - so yeah - save money on housing then spend 4 hours a day sitting in your car ? - yay that … ?

            I was told by a US citizen that no whiteys would live in Texas if it weren't for air-conditioning - I hated it - so if that's your recommendation for cheaper housing, I'd suggest it's because I and others like me wouldn't want to live there - so we won't be bidding prices up there … have a nice day now y'all …

      • +2 votes

        from rba paper
        Some government policies, which we will refer to as zoning, restrict the supply of housing.
        Examples include minimum lot sizes, maximum building heights and planning approval processes.
        Although these restrictions may confer benefits, they also raise the price of housing.

        You are advocating no regulation of block sizes, building heights and no building approvals?
        No thanks

        There is in fact increasing zoning restrictions around building codes in flood and bushfire zones
        With our recent fire history and global warming = rising water levels this seems sensible to me

      • +1 vote

        Houston has quickly become the "Darling" of the US. Since California is mostly stuffed the growth there will eventually have consequences. Issues such as power loss during a cold snap are clear signs of groth beyond infrastructure. There are still spots in Florida where retiring is pretty nice, measured on living costs versus happy people found. Arizona and Utah have affordable houses with good climate. The US East coast is not yet run over by Asians.
        Just like Australia, when people retire, they move to a warmer zone. Both governments urge retiree's to downscale. While a 6 cyl car costs you a grand to register in QLD it is like U$50 in Florida. No State taxes but user pay on any nice park. The US does have red tape for a lot of activities. But the issue of common sense is a nice thing to have. So Elon Musk is building cars in Texas but State Laws prohibit him to sell any direct to customers. Easy for him to circumvent this: Sales get transacted in another state with the key in the mail and the car gets dropped off in a discrete location near the customer. So Elon moved to Texas because there he has hardly any Greenies to stop him to send up rockets in Boca Chica.

      •  

        Have you ever been to Houston? It's a horrible city.

        Be careful what you wish for.

    • +1 vote

      Solution is there, yet pollies want to elect Liberals no matter how corrupt they are.

    •  

      War, GFC, Tax, Law to ban owning multiple properties, Natural disaster, Apocalypse, Zombie?

    •  

      Hehe, I am also eager to know that

  • +18 votes

    Multi-generational mortgages incoming..

    • +7 votes

      or downsize, such as living in a tent in your feudal lord/employers carpark.

    • +16 votes

      To live in it?

      • +5 votes

        You don't need to buy a house to live in a house.

        • +51 votes

          Thats true… You can rent and pay someone elses house off. They will be very grateful.

          •  

            @pharkurnell: That's the cost of living.. whether you pay a mortgage or rent it's a cost.

            • +3 votes

              @Archi:

              That's the cost of living..

              Maybe OP is saying the cost of living is too high because of house prices being high? OP didn't say they were buying a house either.

            • +1 vote

              @Archi: So, you are okey to live under landlords thumb forever ? Wow.

              • +9 votes

                @CrypticM: Many people are, not for everyones tastes but some like the freedom and financial benefits of renting. Personally i own but know others that can easily afford to buy that have no intention of ever buying.

                • +4 votes

                  @gromit: Yeah just sucks for the regular yobbos who don’t have the option

                •  

                  @gromit: What if it not by choice???

                • +1 vote

                  @gromit: there is no freedom in paying someone else's mortgage.

                  • +11 votes

                    @baldur: Of course there is. You save a fortune and free up money to invest elsewhere, home ownership is about safety and security. The idiotic myth that you are just paying someone elses mortgage is just BS created by people that can't do math. What renting is is freedom to move anywhere unburdened, freedom from rates and maintenance costs, freedom from interest rates and repayment stress and a much lower cost of living. As I mentioned personally I took the safety of owning but many others don't.

                    • +7 votes

                      @gromit: as far as I have observed, those who already own their own properties travel the world much more than those who struggle to pay their rents on a monthly basis.

                      • +7 votes

                        @baldur: They would struggle even more if they were paying a mortgage instead of rent.

                        •  

                          @gromit: This is not a universal truth, it may be the truth where you live, or perhaps just your perceived truth due to buying into a property at a bad time/buying one you can't really afford, but it certainly isn't everywhere. There are many places where rent exceeds or is roughly equal to the monthly mortgage payments on the very same property. You can purchase 2br town houses in my home town for <175,000 and they rent for 250-320pw with rent being increased on average by 5-25 dollar at the end of every year. Most sell for around 130-150k. Even on a 15 year mortgage with no deposit, you would be looking at around 250-300pw repaying, substantially lower over a 25 or 30 year mortgage.

                          Owning a property doesn't meant you have less freedom either. We have moved to different areas for work for a year or two at a time and rented out our property while we were gone. This has always covered our mortgage repayments and then some. I don't know why you feel like owning a home has you tethered to it, and i'm not sure why you think you would be 'saving a fortune' when in the end, the money paid in rent is gone and has not paid off your investment, which in the end will be worth more than what ever imaginary savings you seem think the average renter is capable of making in the current market. Money sitting in the bank at this current 0.7-1% interest rate is possibly the worst place to keep it, and building enough money to invest in something worth while means doing that, and for a substantial amount of time for most people.

                          • +7 votes

                            @lulzenberg: except that isn't lower as you are making the same basic mistake many others make. Mortgage payment isn't the total cost, you don't compare mortgage to rent, you compare cost to cost. As you are now the owner you need to add rates, insurance and maintenance to those costs and if rates ever inch back up the situation goes downhill very fast.

                            •  

                              @gromit: Except it is lower, as you're not doing your math correctly. Even at 15 years on a 150k mortgage, you're not spending 1300/month on repayments, rates and insurance, but you are renting the exact same place at 300 pw, not to mention the increase in rent every year.

                              •  

                                @lulzenberg: What the hell? you think rates insurance and maintenance doesn't even add up to $100 a month? what planet do you live on?

                                •  

                                  @gromit: I don't know where you live where you would be paying more than 100/month rates and insurance for a 150k townhouse. You do understand they are calculated on the value of the property/land, right?

                                  • +4 votes

                                    @lulzenberg: of course, however you keep dropping the most expensive item off, maintenance. I am guessing you have realised your numbers don't add up when you put that in.

                                    • -1 vote

                                      @gromit: I didn't exclude maintenance, you added maintenance. So far since 2013 when it was built, we've had to fill in a crack, paint that one area where the crack was, replace a single light fixture and move a door stopper.. this has come to a whopping total of.. $130.. in 8 years..

                                      • +3 votes

                                        @lulzenberg: So by your lack of maintenance required you expect this is the norm for a house? generally you should be allocating around $1000-$2000 a year for a property of that value. remembering that has to cover maintanence that may only pop up once a decade like a repaint or carpet replacement.

                                        • +1 vote

                                          @gromit: So by your large amount of maintenance on a large house you expect this is the norm for a small townhouse?

                                          •  

                                            @lulzenberg: No on my larger more expensive house I allocate more. my estimate was what I would allocate to house of that size and value.

                                            • +2 votes

                                              @gromit: Lets add your high estimate of 2000 (well lets make it 1920 for some more even numbers when divided by 12).

                                              That's an extra 160 per month.

                                              So far we have:

                                              1060pm mortgage
                                              160pm maintenance
                                              100pm rates and insurance
                                              =1320 per month
                                              or 15840 per year
                                              or ~305 per week.

                                              All of this leading to a property being paid off.

                                              Renting, sure, you might get lucky and snap up one of the cheapy 250-270 ones, but more than likely you'll be up against 50+ people on these, and you'll end up paying 300-320.

                                              On the lucky, low end, you've just managed to save 2,860 a year! WOOO! Pop that aside and in 50 years, if property prices don't change, you can buy that very town house.

                                              On the more likely, high end, you've just paid $780 a year more than if you were buying the place.

                                              • +2 votes

                                                @lulzenberg: mate if you can find positively geared properties in today's market then snap them up before an investor finds it. If their are 50 people fighting to rent it then no way are you purchasing as positively geared, those are as rare as hens teeth in todays market. So I thnk you need to point us at some listing that make your numbers believable.

                                                • +1 vote

                                                  @gromit: It is not hard to find. This is the norm in QLD at the moment as soon as you get about an hour or two away from the coast.

                                                  • +1 vote

                                                    @lulzenberg: honestly if you can find a place you want to live that is positively geared then I would snap it up. Generally for a property to be positively geared it means it has no growth potential due to undesirable location and/or difficult rental prospects (hence unlikely to have 50 people fighting to rent it). Most people can't go to remote communities to live as it is not feasible work wise, if you can then good for you, however that is not realistic for most people.

                                                    • +1 vote

                                                      @gromit: it really depends on what you call a remote community. my home town has a population of over 100,000 and that is where these prices are from. if remote community means over 100,000 people but an hour from the coast, then OK. if you go out a bit further, dealing with a 20-45 minute drive to get to a large shopping centre/movies/parks/nightlife/etc you can get them even cheaper (but of course, lower chance of renting them and lower rent when you do). With that said, when we were on the gold coast for a while it would take us 25-30 minutes to drive <10km during the morning and evening rush (a drive that would take 10-12 minutes during work/school hours), the majority of which is spent stationary wasting fuel, so it comes down to what you value in the end. there is work there, there always will be, so we will always be able to rent it out if we need to go somewhere else for a contract, etc.

                                                      • +1 vote

                                                        @lulzenberg: well would love to know where this town is? sounds unreal for an investment prospective to have positively geared homes with massive rental demand.

                                                        • +1 vote

                                                          @gromit: there's really only one town with over 100,000 in QLD that is an hour or so from the coast :P heck, I think in all of Australia there are only 2?

                                                          If this is as rare as you say it is, maybe let's not shout it out from the rooftops? :think:

                      • +1 vote

                        @baldur: zero freedom to move around Aus or Travel the world due to the need to sell and pay state tax

                        • +1 vote

                          @nikey2k27: At present, there isn't any travel. When there is travel, it is not hard to find people to rent your place to, even short term..

                  •  

                    @baldur: but it would be a better option than having your house repossessed if you somehow fell on hard times are were unable to keep up your repayments.

                    Always two sides to every coin.

              •  

                @CrypticM: if you were looking for someone to blame for living under the landlords thumb…maybe you should turn that attention to regulators for not providing proper rental protection for tenants and landlords…

                in Europe where a lot of the population rents, there are laws and regulations in place that protect tenants and landlords that don't exist in Australia.

                when rental agreements become more fair and have more protection, there will be a trend towards renting.

                Australia is heading towards the same type of ownerships like HK, Singapore, London, Paris, New York and Tokyo.

                people just have to accept the fact and stop selling what is essentially the great Australian dream is not the best way forward.

              •  

                @CrypticM: In europe apparently it's pretty common for ppl to rent forever.

                Not saying that's good though, I love the feeling of paying off my home, but it seems from here that the Aussie dream of owning your own home may have to change.

                I too wonder about the next generation. It's just getting so much harder financially and in every direction.

            •  

              @Archi: Except there's a massive difference.

              Pay rent for 30 years and you've only had a place to live for 30 years

              Pay a mortgage for 30 years and you've not only had a place to live for 30 years, you also have a very large asset.

              • -1 vote

                @EconomicDecline: if you didn't know already. owning your home and renting your home are 2 different things. cost implications are different, responsibilities are different, risk is different, the cost of owning a property vs cost in renting is different.

                if you the overall cost of renting a house is the same as the overall cost of owning your house then i would agree. but it is not.

          •  

            @pharkurnell: You mean paying less per year than what it would cost for the interest, rates, maintenance and body corp (if applicable) on a similar property? Many places in Sydney are like this, I.e being subsidized by the landlord.

        •  

          How many investment properties do you own?

          • -1 vote

            @sir-screwball: apart from my POR

            2.why?

            •  

              @Archi: I was just demonstrating that the manner in which you carry yourself makes it very obvious that you're speaking from a place of self-interest. You're also suckling at the government funded teat and then spouting here that it's the regulator's fault. It is the government's fault for turning what was a fundamental foundation of Australian life into a commodity that can be bought and sold by overseas investors.

              It's disappointing that you're receiving what is ostensibly state sponsored welfare, whilst simultaneously denigrating those who are venting their displeasure at the broken system that you are helping to sustain.

              Call a spade a spade; You got what you wanted, you don't care about those who can no longer afford it thanks to you and others, and you're blaming "tHe ReGuLaToRS" for the situation when you know full-well that you and yours are the reason this is happening.

              • +2 votes

                @sir-screwball:

                you're blaming "tHe ReGuLaToRS" for the situation when you know full-well that you and yours are the reason this is happening.

                i'm just playing the cards i'm dealt with,

                • i had low paying jobs,
                • i was made redundant in the GFC
                • i had to sell my investment property at a loss because i couldn't afford repayments.
                • i was on welfare
                • i worked 2 or more jobs at a time
                • i worked hard for my family and what i have

                i never measure any body else's lives with the same ruler as i measure mine.

                •  

                  @Archi: Thanks for the story, it doesn't explain why it's okay for you to be able to work hard and attain a home (let alone further rental properties) but it's ALSO okay for you to contribute to a system that makes it basically impossible for others to do the same.

                  Obviously I'd never be able to sway you to change the way you look at this, but at least stop hiding behind the paper thin facade that you're somehow blameless and/or oblivious to what you're doing. Just be honest. You got what you wanted and you're content with others not being given the same chances because you got yours and so now you don't care.

                  •  

                    @sir-screwball:

                    You got what you wanted and you're content with others not being given the same chances because you got yours and so now you don't care.

                    just because i have what i want, doesn't mean i don't care. i just don't believe the system is working in favour of the disadvantaged,

                    everyone to certain extent is selfish. i'm selfish because i want to protect myself and my next generation, waiting for the system to correct (if it is able) wont happen. that's my opinion.

                    the game is to speculate what will happen in 30 years time. i've made my play… and if the market goes down and the there is market correction and i lose lots of money, my investments are worthless and my future generation has to pay for it, well that's the decision i made. and my kids will curse me till i go to the grave.

                    • +1 vote

                      @Archi: Yeah something tells me that pure capitalist greed is likely to win over, for some reason. It's run rampant up til now and is not really showing any signs of abating so I'm sure you're going to be fine. Others who weren't born fast enough are shit outta luck though.

  • +12 votes

    No no. I just bought a house. Must.go.up.to.the.moon!

    • +3 votes

      Why must it go up though? You have now got a house, unless you are just sitting on it for the money, otherwise it's useless for it to just go up.

      • +2 votes

        Because when he/she is ready to retire and downsizing, selling the house will be giving him/her heaps to retire.

        •  

          next ad you see - deceased estate held by one family for 60 years!.

          $8m to the grave….

      • +1 vote

        Because if I end up owing more than what it's worth I'll never be able to refinance and will be at the total mercy of the current finance provider.

      •  

        Also cos I'll feel bad.

        But yes the intent is to live there perpetually until the end of time…. Or me

      •  

        But I get your point. If prices stay stagnant for ever then that's also a happy outcome for me

        • +3 votes

          Just bought a place myself. Also prefer that prices don't go down due to mortgage, but since I'm staying put stagnation doesn't sound like a bad deal neither.

          Realistically though, once paid off I don't mind if all house prices go down. While this means I get less when I sell my place, it does mean upgrading to a nicer place is cheaper, and net I'd (assumedly) pay less for the upgrade if all house prices went down by the same %.

          Ie: if my house is worth 50% less, say 1m down to 500k, and the nicer place would've gone down from 2m to 1m, I'm out of pocket 500k instead of 1m, even though I lose out on 500k on my place I'm still 500k better off.

          •  

            @CMH: Just curious, how many:
            1- Residential houses do we have?
            2- SqMetres (or Bedrooms) median house?
            3- Citizens do we have?
            4- Total population (incl tourists)?

            I feel like this has been overlooked. We need to know the hard figures to see if there really is an imbalance between Supply and Demand.

            •  

              @Kangal: If we replaced houses with food… Would we try to calculate with your parameters if we have an imbalance between Supply and Demand of food? I would assume we'd just increase supply until food is affordable to everyone.

              In a way I do feel that we should treat both equally. The availability of both are important to anyone's life and wellbeing, and supply shouldn't be constrained just to ensure the financial wellbeing of those who have invested in a place.

              However, I might also argue that the majority of people who complain about not being able to afford a place aren't looking at places they can actually afford. Their "requirements" for a place for them to purchase does not meet their financial ability.